Effective Rural Programs Are at ‘Grave Risk’

Public programs that invest in rural America reduce poverty and expand the economy, an economist tells the Senate ag committee. Senators must exercise leadership to preserve these effective programs.

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EDITOR’S NOTE: Bruce A. Weber is an economist who testified before the Senate Committee on Agriculture, Nutrition, and Forestry as part of the committee’s budget deliberations. His testimony (adapted slightly) appears below. Weber urged the committee to exercise caution about threats to rural development programs that support such things as affordable housing, broadband expansion, water and electric utilities construction, and small business development.

Four fundamental structural realities drive the future of rural America and its farm economy.

The incomes of farm families — and thus the health of the agricultural sector — are very dependent on the economic health of rural communities. This is because most farms get most of their income from off the farm

Each rural community is unique, with a diverse set of nonfarm sectors providing the primary economic base for most rural counties.

The health of rural communities is very tied to urban centers, and rural economic health requires increasingly strong connectedness to urban centers

Rural communities face inherent structural challenges due to their small populations, low-density and remoteness. The Senate Committee on Agriculture, Nutrition, and Forestry and Congress has long recognized this as it developed a remarkable set of programs specifically tailored to address these challenges.

My colleagues have discussed the structural challenges in the current agricultural economy and how farm programs address the challenges facing farms. I would like to discuss the structural challenges facing the rural economy and how rural development programs address these inherent challenges. The takeaway is that place-based federal rural investments stimulated income and job growth and reduced poverty in rural areas.

Several recent studies support this conclusion:

USDA economists John Pender and Richard Reeder analyzed the impact of rural development projects funded by the Delta Regional Authority (DRA) in distressed Mississippi Delta counties. They found that income and earnings grew more rapidly in DRA counties than in similar non-DRA counties.

In some of my ongoing research projects, there is preliminary evidence that spending by the USDA Rural Development agency on business and economic development loans increased employment and reduced poverty. A colleague at the University of Missouri and I are finding that counties that received more in these loans during the 2000-2009 decade had lower poverty rates in 2009, controlling for other factors that might affect poverty.

Research currently underway with colleagues at Pennsylvania State and Texas A&M Galveston also shows a positive effect of USDA Rural Development spending on employment growth over time.

I would suggest some specific examples of rural investments that I believe are important for rural people and places based on my 40 years of studying rural economies:

Accessible and affordable high-speed broadband connections are now essential for rural economic development and are a critical infrastructure investment for rural areas.

Food assistance is a different kind of investment in rural America that not only provides a safety net for vulnerable people but also provides a significant boost to rural and urban economies. Research by the USDA Economic Research Service on the impacts of the Supplemental Nutrition Assistance Program (SNAP), for example, suggest that $1 billion in SNAP payments generates over $100 million in farm income and 3,300 farm jobs, as well as $1.8 billion in total output in the economy.

And finally, as the Pender and Reeder study shows, regional approaches that use federal place-based investments to leverage other public and private sources of funds can increase income and jobs in rural counties.

… The rural development programs [the Senate ag committee] has developed over many decades have a significant positive impact on America’s rural communities. Many of these programs are currently at grave risk. This is a critical moment for Senate to exercise leadership in ensuring that rural communities have the supports they need to thrive as they face the future.